IF MY ACCOUNT IS OVER $1 MILLION, WILL I HAVE A LOSS?

Not likely - here's why...

1. At the date of bankruptcy, the trustee will determine the TOTAL CLIENT NET EQUITY, and the size of the CUSTOMER POOL.

2. The trustee will then determine EITHER:

3. The trustee will calculate the SHORTFALL, if there is one, as:

SHORTFALL = TOTAL CLIENT EQUITY less CUSTOMER POOL

4. The trustee will allocate the SHORTFALL to each customer in proportion to their claim for net equity.

HERE IS AN EXAMPLE:

The trustee determines the following:
TOTAL CLIENT NET EQUITY $2.0 BILLION
CUSTOMER POOL               $1.9 BILLION
SHORTFALL                       $100 MILLION or 5% (100 million / $2 billion)

CLIENT 1 HAS CLIENT NET EQUITY OF $2 MILLION:

LOSS ALLOCATED = $100,000 (5% OF $2 MILLION)
CIPF COVERAGE =   $1 MILLION
LOSS TO CUSTOMER = NIL                      

CLIENT 2 HAS CLIENT NET EQUITY OF $20 MILLION:

LOSS ALLOCATED = $1,000,000 (5% OF $20 MILLION)
CIPF COVERAGE =   $1 MILLION
LOSS TO CUSTOMER = NIL  

As you can see in this example, unless a customer's loss exceeds $20 million, there will be no loss.

This example is for illustrative purposes and each bankruptcy can produce different results. In most bankruptcies, clients who are eligible for CIPF coverage will find that the $1 million limit of coverage is sufficient to protect their assets, as of the date of bankruptcy.